Argentine Bonds to Slide After Election Surprise

It’s hard to talk of a shock election result in Argentina, a country where polls are notoriously unreliable, but Economy Minister Sergio Massa’s lead in Sunday’s first round vote was clearly a surprise. It’s also possibly the least favorable outcome for investors.

Bonds are already falling and the unofficial peso, known as the blue dollar, will weaken. The blue-chip swap rate, an exchange-rate index derived by comparing the prices of Argentine stocks in pesos with ADRs, weakened almost 8% on Friday to more than 1,000 pesos per dollar. The good news for investors is in the new congress, ...